Better PeoPle. Better Business. Better World

Better PeoPle. Better Business. Better World.

W M S I n d u S t r I e S I nC.2012 s u m m a ry a n n u a l r e p o rt

Front Cover: At WMS, we believe talented people are the key to our success and to our future growth. By focusing on developing, retaining and recruiting imaginative and passionate people, we will build a better business that delivers innovative, differentiated products and services to our customers and players; we believe that by sharing our success in the communities where we live and work, we can fashion a better world.

Pictured at left is our innovative, new Aladdin & the Magic Quest® game that features a unique casino gaming experience due to the synchronized motion of the chair with game play.

through imagination, talent and teChnology, we Create and provide the world’s most Compelling gaming experienCes.Our Mission Statement is the singular point of focus that directs our long-term

initiatives and our daily tasks. It aligns our efforts to ensure that we do not

lose sight of what is important as we grapple with daily challenges.

exCellenCe One simple word…but a powerful guiding principle to our actions. It reflects

the standard against which we measure ourselves, it establishes the reference

point for how we carry out our responsibilities, it powers our efforts for contin-

uous improvement and it drives our commitment to deliver on our mission’s

promise: create and provide the world’s most compelling gaming experiences.

innovation…passion…integrity…Quality…respeCtThese are the Core Values that shape our behavior. They are the bond that

connects us in our commitment to excellence and in our global alignment

toward achieving future success and satisfaction.

Our Mission

Table of Contents

A messAge to oUR stoCKholdeRs 2

Ceo letteR to stoCKholdeRs 3

oUR PRodUCts 9

oUR PeoPle 18

shARINg oUR sUCCess 22

leAdeRshIP teAm 24

FINANCIAl stAtemeNts 28

BoARd oF dIReCtoRs 26

CoRPoRAte INFoRmAtIoN IBC

2012 sUmmARy ANNUAl RePoRt1

Better People: Talented people are the most important

resource of WMS. People create and build our entertaining

products, they cultivate the relationships with our customers

and they drive our innovation and continuous improvement.

Stepping up efforts to provide new opportunities to learn,

develop and grow as individuals and productive employees,

we are also driving increased accountability and recognition.

Better Business: By embracing and celebrating our culture,

developing our people and increasing employee engagement,

we nourish a workplace that fosters innovation, passion

and continuous improvement to create better products and

processes that yield greater value for customers, players and

stockholders. Better World: As a transformative company,

we can favorably influence the communities in which we live

and work to shape a better world.

a message to our stoCkholders

BetteR PeoPle. BetteR BUsINess. BetteR woRld.2

Fiscal 2012 was a year of both great chal-

lenges and significant accomplishments. We

began the year by announcing the retooling

of our product plan, the elimination of

some non-core products and a restructuring

of our organization, including a reduction

in force. As a result, everyone had to step

forward and learn to do more with less in

our concerted efforts to contain costs.

But we fought through this transition, and

our employees across the company worked

diligently to restore the normal flow in

commercialization of new products (from

development through regulatory approvals)

to improve our cost structure, to continue

to invest in innovation and to strengthen

the foundation of WMS for the future.

Looking back over the past year, I know our

employees sometimes felt as if they had

never worked harder or faced more obstacles.

They adapted to meet the organizational

changes, maintained their confidence in

the face of significant company evolution

and worked hard to meet the needs of

our customers. I would like to thank each

and every employee for their dedication,

their passion and their continued focus

on pursuing our goals. I have never

been prouder of their teamwork and

accomplishments.

In fiscal 2012, WMS earned $64 million in

net income on total revenues of $690 mil-

lion. We invested $83 million of capital to

strengthen and upgrade our gaming opera-

tions business for the future, another $81

million to expand and enhance our facilities

and our IT infrastructure around the world to

create a stimulating workplace environment

that will inspire our employees’ creativity

and $30 million to acquire technologies

and businesses. We spent $95 million,

or nearly 14% of our total revenue, on

research and development initiatives to

fund our innovation pipeline, future new

products and capabilities, and we returned

$50 million to stockholders through our

share repurchase program.

The WMS team made meaningful progress in

our operating execution, which manifested

itself in steady financial improvements

in revenues and margins on a quarterly

sequential basis. After beginning the year

with the critical review of our business

strategies, our organization and our product

plans to assess what we needed to do to

reestablish growth, we executed well on

implementing the changes. We found that

our strategic direction was right, but our

customers were telling us the timing of

implementing new technologies on their

casino floor was incompatible with their

capital plans in the present economic

environment. As one customer aptly put

it, “Our forward-looking technology had

gotten us ahead of our skis in this eco-

nomic environment.”

BrIAn r. GAMAChe

ChAIrMAn OF

The BOArd And

ChIeF exeCuTIVe

OFFICer

Better people Better Business Better world “”


As a result of our assessment, we refined

our product plans to put our development

focus squarely on what our customers told

us they needed in today’s still weakened

economic conditions. We prioritized our

specific r&d initiatives and thus proactively

restructured our organization to revitalize

our development teams and strengthen our

entire supply chain. We also reduced our

entire workforce by approximately 10% to

both streamline certain functions and lower

our overall organizational cost structure.

Importantly, what our customers were tell-

ing us was that they wanted more great-

performing content, which aligns seamlessly

with our core competency. As the worldly

philosopher Yogi Berra once stated, “When

you come to a fork in the road…take it.”

And we did; unfortunately, the road was a

bit bumpy for us!

Our game development studios underwent

changes to sharpen focus and enable better

collaboration. Our goal was to inspire fresh

creativity and also speed the development

cycle. Following our realignment initiatives

in late summer 2011, we began to make

progress in the rate of commercialization

of new products, with a number of our new

games obtaining their initial jurisdictional

approvals in September and October and

then continuing through the rest of the

year. Over the course of the year, our teams

made significant progress. By June 2012,

we benefited from changes in our develop-

ment cycle to fast track additional new for-

sale games once we determine we have a

hit on our hands. Our new products were

once more getting approved on schedule,

and we had launched a number of new

innovative products that set a new stan-

dard for industry entertainment, such as

the new Wide-Area Progressive, Aladdin &

the Magic Quest® game that debuted our

next generation operating system and also

incorporates synchronized chair motion

with its game play.

We coupled our renewed development

efforts with a significant expansion in the

number and diversity of math models upon

which our new games were to be developed,

thus creating a much greater range in

differentiation of gaming experience for

players. We also expanded initiatives that

provided us with greater research into

determining a better balance of game dif-

ferentiation on casino floors. We learned a

lot about the benefits of a better balance

of game content and gaming machines to

enhance the performance and productivity

of the casino floor for our customers.

As we ended fiscal 2012 and entered fiscal

2013, we were pleased with our operational

progress. We had anticipated faster improve-

ment in financial results, but the continued

global economic challenges and increased

BY end OF FISCAL

2012, We hAd

LAunChed A nuMBer

OF InnOVATIVe neW

PrOduCTS ThAT

Were SeTTInG A neW

STAndArd OF GAMInG

enTerTAInMenT.

“”


WMS 2012

total revenue

$690 million

of

competitive environment were a significant

drag on our rate of improvement. Impor-

tantly, our operating accomplishments

solidified our foundation for what we

believe will be the next chapter in our

long-term growth. In addition to the

progress already mentioned, during the

year we:

❙ Launched successfully our new

Bluebird®2e cabinet with emotive

lighting, adapted our proven Bluebird2

cabinet and CPU-NXT®2 operating

platform for Class II markets and

launched our first participation games

on our new, next-generation CPU-NXT3

platform.

❙ Improved our product unit ship share

from approximately 18% in the July-

to-december 2011 six-month period

to more than 22% in the January-to-

June 2012 six-month period, among

the top five slot gaming suppliers in

the u.S. and Canadian marketplace.

❙ Secured a key partnership with Station

Casinos to launch our new My Poker®

video poker gaming machines in the

Las Vegas locals market in fiscal 2013.

❙ Invested aggressively in upgrading

our installed participation base to

new Bluebird2 and Bluebird xD™ gam-

ing machines, as we now have about

two-thirds of our installed base on

these cabinets.

❙ Selected to participate in the VLT

replacement programs by Alberta and

Manitoba, Canada, with shipments

beginning in FY 2013.

❙ Built state-of-the-art technology

facilities that will house our devel-

opment teams in Chicago and India,

and we upgraded our Waukegan

data center to a Tier 2 Plus industry

functionality standard to support

continuous operations of our business.

❙ Secured a $400 million long-term

credit facility that provides ample

financial flexibility and resources for

the years ahead.

❙ received recognition once again from

the Chicago Tribune and others as one

of the best workplaces in greater

metropolitan Chicago.

❙ And continued to recruit top talent

to bring a level of expertise and

experience in “Best Practices” to all

areas of the Company.

In addition to the progress we made in

our business and in strengthening the

total foundation of WMS, we made sig-

nificant strides in building, organically

and through supplemental acquisitions,

We BeLIeVe ThAT

Our OPerATInG

PrOGreSS And

ACCOMPLIShMenTS

In FISCAL 2012

SOLIdIFIed The

FOundATIOn FOr

Our nexT PhASe

OF GrOWTh.

“”


WMS 2012

$877 million

stoCkholders’ eQuityin total

alliances and partnerships, a comprehensive

suite of digital interactive gaming content,

products and services. With our advanced

existing capabilities, which are a natural

extension of our core competencies in

developing player-appealing gaming content,

we believe we are favorably positioned to

help our customers benefit through the

development of customized gaming experi-

ences that will engage their existing patrons,

attract new players and help them grow

their businesses. Since our first steps more

than 65 years ago as an innovative small

pinball game developer and manufacturer,

we have continually evolved and redefined

our business model in order to optimize

shareholder value.

Several years ago, we envisioned and

anticipated the convergence of land-based

casino entertainment with players’ desires

to access their favorite gaming content

across the full spectrum of online, social,

casual and mobile gaming channels. Impor-

tantly, we began formulating our strategies

and developing leading solutions for our

customers to take advantage of these new,

emerging distribution channels in a prudent

manner. As a result of our anticipation of

this convergence, we developed, acquired

and now possess the appropriate experience

and skills needed to help our customers

prepare for this convergence in their busi-

nesses and thus meet their current and

evolving needs with a flexible and com-

prehensive set of value-added products,

managed services and end-to-end solutions.

recently, just after our fiscal year-end, we

combined all of our existing online, social,

casual and mobile gaming products and

services under one global brand umbrella,

Williams Interactive. We believe this will

enable us to further concentrate our

efforts and increase our collective ability

to leverage our operational and develop-

ment initiatives to propel growth in these

emerging distribution channels. Our

President, Orrin edidin, was named to the

additional position of President and CeO of

Williams Interactive. Orrin’s organizational

knowledge, broad management expertise,

understanding of the dynamics of these

new emerging distribution channels and his

deep understanding of what our land-based

casino operators need to maximize their

benefit from iGaming opportunities make

him the ideal leader to move our interac-

tive initiatives forward for the benefit of

our customers, their players and WMS.

having strengthened our organization,

realigned our product development and

operational efforts to address our custom-

ers’ current needs and their players’ current

behaviors and gained our momentum over

We SAW ThAT

The COnVerGenCe

OF LAnd-BASed

CASInO GAMInG WITh

InTerACTIVe GAMInG

enTerTAInMenT

WOuLd CreATe

neW GrOWTh

OPPOrTunITIeS

FOr Our CuSTOMerS

And FOr WMS.


“”

WMS 2012

$95 million

r&d initiativesspent on

the past year, we are in an excellent posi-

tion to further build our business. reflect ing

this commitment to maintain the ongoing

progress in our product sales and gaming

operations, Ken Lochiatto, executive Vice

President of our parent company, was also

named to the additional role of President

and COO of WMS Gaming. Since joining us in

February 2006, Ken has been instrumental

in strengthening our processes to be more

customer-centric, improving our revenues,

operating margin and market share, and

his contributions and leadership have been

invaluable in driving our long-term growth.

As we look forward, our goals are straight-

forward, clearly defined and understood

throughout the organization:

❙ First: develop and introduce innovative,

player-appealing games and new cabi-

nets to grow our installed partici pation

product base, improve our daily aver-

age revenue and further support our

customers. We expect to continue

to maintain particular emphasis on

increasing the mix of wide-area pro-

gressive units and our proprietary

Adaptive Gaming® technology units.

❙ Second: develop and launch differen-

tiated for-sale games and cabinets to

garner increased ship share. We place

extraordinary emphasis on creating

value for customers—through creative

gaming content, new cabinets and by

providing world-class customer service.

❙ Third: Invest, develop and support

the expansion and extension of our

interactive products and services. We

expect to aggressively leverage the

transition of our existing library

of great gaming content into new

distribution channels. While our pri-

mary focus during fiscal 2013 will be

on further organic development, we

will remain open to selective alliances,

licensing opportunities and acqui-

sitions that would reinforce our

“best-of-breed” approach to bring

the benefits of interactive gaming

to our customers.

❙ And Fourth: Continue to enhance our

margins through further success with

our strategic sourcing initiatives and

the pursuit of value-added projects in

our continuous improvement efforts

and work toward flawless execution.

These initiatives are expected to gen-

erate greater effectiveness, provide

organizational productivity to efficiently

support additional global growth

and deliver greater cost savings and

returns on capital that will build

stockholder value and fund additional

profitable growth.

Our GOALS Are

STrAIGhTFOrWArd,

CLeArLY deFIned

And underSTOOd

ThrOuGhOuT WMS.


“”

WMS 2012

$194 million

operations, aCQuisitions and inFrastruCture

invested in gaming

We undertake these four goals with a clear

focus on enhancing long-term stockholder

value and strengthening WMS for the future.

As the gaming entertainment industry

expands and transitions into a new world

that transcends the in-casino experience to

also allow players to enjoy their gaming

entertainment at home or on their favorite

mobile device, we must remain steadfast in

our courageous commitment to continue to

support investment in our core, in-casino

products and to step up and invest for the

longer-term in our interactive products and

services. As President ronald reagan once

stated, “The future doesn’t belong to the

faint-hearted; it belongs to the brave.”

In closing, I would like to thank our Board

of directors for their counsel and support.

Their shared vision and commitment to

build and grow WMS into a truly world-class

company have been instrumental in our

long-term growth and progress. In particu-

lar, I want to thank Lou nicastro, who is

stepping down from the Board later this

year, for his guidance and insight gained

through his more than 45 years of associa-

tion with WMS and its predecessor compa-

nies. he will be dearly missed but never

forgotten. We extend to him our warmest

wishes for continued good health and

happiness in life’s journey. Lou’s spirit

and influence will live on within WMS for

generations to come.

To you, our stockholders, we thank you for

your continued support. We will continue

to invest in the areas of intellectual prop-

erty, technology and talent in order to

build sustainable long-term profitable

growth and stockholder value. We pledge to

you our continued focus, unwavering com-

mitment and total energy as we travel

together on our Journey of Greatness.

Sincerely,

Brian r. Gamache

Chairman of the Board and

Chief Executive Officer

We WILL COnTInue TO

InVeST In CreATInG

InTeLLeCTuAL

PrOPerTY,

TeChnOLOGY And

TALenT TO BuILd

PrOFITABLe And

SuSTAInABLe LOnG-

TerM GrOWTh And

STOCKhOLder VALue.

“”


WMS 2012

$157 million

Cash Flow From operating aCtivities

generated by

2012 summary annual report9

WMS 2012

A successful Addition in fiscAl 2012 to WMs’ innovAtion series

WAs the plAyer-AppeAling Colossal Reels™ gAMes thAt feAture An oversized reel set

Alongside the regulAr reel set.

Colossal Reels

better people. better business. better world.10


WMS 2012

Just As in the clAssic Mystery boArd gAMe, ClUe ™ plAyers in the cAsino seek to deterMine Which of the six chArActers

coMMitted the Murder, in Which rooM of the fAMous nine-rooM

MAnsion, And With WhAt WeApon.

CLUE



WMS 2012

in fiscAl 2012, successful neW products drove revenues, froM

fAn-fAvorite neW pArticipAtion gAMes to the innovAtive, entertAining

Mega MUltiplieR ® sUpeR shot ™ portAl bonus gAMing ApplicAtion.

The Lord of the Rings™


interactive products and servicesextending our strengths into new distribution channels

More than four years ago, WMS began to target the convergence

of land-based casino gaming and players’ demonstrated desires

to enjoy their gaming entertainment online. Strategically, we

set out to ensure WMS had a differentiated, customer-focused

operating plan to address these new opportunities based on

our core strength—our ability to create innovative games. Our

approach primarily was to build from within, which would

enable us to research players’ preferences while maintaining

a prudent approach to deployment of stockholder capital as

these opportunities evolved.

Our goal was to build a ”best-of-breed” comprehensive portfolio

of products and services capable of meeting the varying needs

of our customers—from online wagering to a broad array of

interactive, play-for-fun solutions for the social, casual and

mobile mediums. In short, to leverage our extensive, existing

library of great games and our history of creating innovative

gaming content to follow our customers’ needs and players’

preferences to enjoy great gaming entertainment across

multiple distribution channels that extend beyond the four

walls of the casino.



online WAgeringOur initial online development efforts led to the creation of our UK-based, real money online JackpotParty.com casino platform. Through development efforts already underway, WMS is extend ing that platform to provide a B2B, fully managed online casino website in Belgium in collaboration with Groupe Partouche, a leading European casino operator and the largest land-based casino operator in Belgium. Through the acquisition of Jadestone Group, we added an established B2B developer and publisher of online gaming content with proven expertise in game server integration serving a veritable who’s who of leading online gaming companies.

http://www.JackpotParty.com

plAy WMs sociAl cAsino gAMes At hoMe or doWnloAd Apps to your Mobile device.


online plAy for funOur interactive, play-for-fun efforts are focused across the social, casual and mobile distri-bution channels. Leveraging our extensive library of classic slot content, our core competency for developing player-appealing gaming entertainment and the acquisition of Phantom EFX favorably positions WMS to provide casino operators with flexible solutions and customized gaming experiences that will engage their existing patrons, attract new players and help them grow their businesses.


While WMS is renowned in the industry for its legendary Culture of Innovation, a key ingredient of that culture is the teamwork

and collaboration that takes place amongst our talented employees to design, develop and produce our innovative products and

services. Our new Technology Development Center incorporates numerous collaboration

meeting areas and lounge settings (pictured below) to stimulate creative conversations,

innovative ideas and teamwork.

A compAny of collAborAtion

WMS 2012

“

”

WMS 2012

teAmwork is A fundAmentAl key to our success. we collAborAte Across

All depArtments—from product creAtion to production to field instAllAtion—to deliver high-

performing gAmes And exceptionAl service to eAch And every customer.

Keith B.

WMS 2012

wms is A fAst-pAced, high-energy environment where innovAtion And

pAssion Are At the core of our orgAnizAtionAl culture. the depth of dedicAted employees within wms is impressive And inspiring, And is

whAt ultimAtely will help drive wms forwArd for yeArs to come.

Heather C.

WMS 2012

whAt mAkes wms speciAl is the pAssionAte effort put forth. numbers never fully convey the time, energy

And emotionAl investment thAt mAde them possible, but At wms, it is these

intAngibles thAt sepArAte us from our competition And will ultimAtely enAble us to Ascend to the leAder-ship position in the gAming industry.

Rob B.



“

”

WMS 2012

collAborAtion At wms is like the film clAssic The MagnificenT Seven, where A bunch of speciAlists All

combine their tAlents into one greAter mAgnificent whole.

Jeremy H.

WMS 2012

wms employees, through teAmwork And their contributions during our kAizen events, more thAn doubled

the cApAcity of our present pArticipAtion production cells in the lAst 8 months by eliminAting wAste in our process. we simply

listen And mAke it hAppen.

Arturo H.

WMS 2012

through teAmwork And collAborAtion, wms employees

continue to join together Across functions for A single mArket-driven

cAuse…to creAte new, innovAtive, fun And exciting gAmes for plAyers

to plAy which is the core of our business. plAyers plAy gAmes; And

it is plAyers who drive cAsino purchAses of our products by voting

on the gAmes they love viA the dollArs they plAy.

Ron R.

“

”

WMS 2012

in todAy’s typicAl work environment where everyone is doing more with

less, it’s nice to be A pArt of the wms teAm where colleAgues proActively

solicit vArious opinions to creAte innovAtive, differentiAted, better

products. it speAks to A high level of collAborAtion And the pAssion

to do An exceptionAl job.Steve B.

WMS 2012

whAt’s inspiring About our process is thAt everyone hAs A sAy in how the

finAl product tAkes shApe. we gAther All of these hyper-intelligent,

creAtive people And collectively design, plAy, refine And plAy AgAin,

As A teAm, until the gAme is perfect. we demAnd the highest quAlity And

level of polish from everything we do And wms people deliver.

Shekhar D.

WMS 2012

collAborAtion, teAmwork And innovAtion All cAme together in

the concept creAtion for our next- generAtion cAbinet thAt will succeed

our tremendously successful BlueBird2 cAbinet. during An intense

one-month period, individuAls on computer-Aided design (cAd), pArt mAkers working from those cAd

designs And some good old innovAting on “nApkin drAwings design” (ndd) enAbled us to mock up the concept And creAte the bAsic design being used As we now geAr up for the

production cAbinet.Wally S.


Sharing our SucceSS

WMS believes in giving back to the communities where we

live and do business. The Company is actively involved in

supporting the efforts of social service organizations, schools

and other non-profit organizations, and we call our community

involvement “Project Lend a Helping Hand.” We regularly give

back to our communities by providing food, clothing and

educational supplies. These programs have benefitted the

homeless, the elderly, women’s shelters, children’s homes,

medical research, childcare centers and local schools. While

WMS employees are involved in their communities throughout

the year, during National Volunteer Week alone in April 2012,

our U.S. employees dedicated hundreds of volunteer hours

to non-profit groups and projects in their communities. By

sharing our success, we can favorably shape our communities

and help create a better world.


green initiativeSWMS employees contribute to our company-wide goal to reduce our carbon footprint and save energy while controlling costs at the office and in their homes. One way is by participating in company-wide “Unplug and Unwind” campaigns during extended holiday periods when employees turn off unnecessary

lighting, computers, power-hungry electronic devices and testing equipment to reduce greenhouse gas emissions.

Every year, an average home releases 38,113 pounds of carbon. As part of our U.S. Sustainability Program, each facility offers employees the

opportunity to borrow an elec-tricity usage monitor that can be used to measure individual appliance energy consumption in their homes. By doing so, employees can make an informed decision on their individual energy usage while realizing personal utility savings.

Project lend a helPing handWMS employees give generously to a broad range of causes including Habitat for Humanity, Boys and Girls Clubs and the Animal Foundation. With many families in our communities often unable to afford healthy meals, Project Lend a Helping Hand and the WMS Women’s

Networking Group organized local Food Bank days. In April, teams donated food to shelters, prepared meals for families at a Ronald McDonald House® and packed more than 16,000 pounds of food at local food banks including the Chicago Food Depository.



WMS is favorably positioned to progress and grow in the years ahead reflecting the vision and innovation of our dedicated and passionate leadership team.

2012 WMS leaderShiP teaM

OPPOSITE:

briAn gAmAche

Chairman of the Board and Chief Executive Officer

OPPOSITE BACK ROW FROM LEFT:

ken lochiAtto

Executive Vice President and Chief Operating Officer

orrin edidin

President

scott schweinfurth

Executive Vice President, Chief Financial Officer and Treasurer

PAGE 24 FROM LEFT

kAthleen mcjohn

Senior Vice President, General Counsel and Secretary

dAve vitullo

Vice President, Business Transformation

lArry pAcey

Executive Vice President, Global Products and

Chief Innovation Officer

lAurie lAsseter

Senior Vice President, Engineering and Chief Technology Officer

fred gAbbArd

Senior Vice President, Product Development Operations

phil gelber

Senior Vice President, Product Development

deAn ehrlich

Vice President, Gaming and Networked Operations

rob bone

Senior Vice President, North American Sales and Marketing

PAGE 25 FROM LEFT

jordAn levin

Vice President and Chief Operating Officer of Williams Interactive

sebAstiAn sAlAt

President, WMS International

enrique ruiz de AzúA

Vice President, International Operations

jAnice rike

Senior Vice President, Human Resources and Information Technology

Allon englmAn

Vice President and Design Chief

mike rutz

Senior Vice President, Global Supply Chain

bob cArney

Vice President, Global Commercial Operations

Al duff

Vice President, Human Resources

2012 wms leAdership teAmexecutive committee


Keith r. Wyche

President, ACME Markets,

a division of SUPERVALU INC.

louiS j. nicaStro

Founding Director

Brian r. gaMache

Chairman of the Board and

Chief Executive Officer,

WMS Industries Inc.

edWard W. raBin, jr.

Lead Director and

Retired President,

Hyatt Hotels Corporation

roBert j. BahaSh

Retired President,

McGraw-Hill Education

The McGraw-Hill Companies

Patricia M. nazeMetz

Retired Chief Human Resources

and Ethics Officer,

Xerox Corporation

ira S. Sheinfeld

Partner, Hogan Lovells US LLP

(Attorneys-at-Law)

BoBBy l. Siller

Retired Member of the

Nevada State Gaming

Control Board

WilliaM j. vareSchi, jr.

Retired Chief Executive Officer and

Vice Chairman of the Board,

Central Parking Corporation

neil d. nicaStro

Retired President and

Chief Executive Officer,

Midway Games Inc.

Board coMMitteeS

Audit and Ethics Committee:

Robert J. Bahash Chair

Edward W. Rabin, Jr.

William J. Vareschi, Jr.

Compensation Committee:

Patricia M. Nazemetz Chair

Edward W. Rabin, Jr.

Robert J. Bahash

Nominating and Corporate Governance Committee:

William J. Vareschi, Jr. Chair

Patricia M. Nazemetz

Bobby L. Siller

Gaming Compliance Committee:

Steve DuCharme Chair (non-board member)

Neil D. Nicastro

Bobby L. Siller

executive officerS

Brian r. gaMache Chairman of the Board and Chief Executive Officer

orrin j. edidin President

Kenneth lochiatto Executive Vice President and Chief Operating Officer

Scott d. SchWeinfurth Executive Vice President, Chief Financial Officer and Treasurer

larry Pacey Executive Vice President, Global Products and Chief Innovation Officer

Kathleen j. Mcjohn Senior Vice President, General Counsel and Secretary

john P. McnicholaS, jr.Vice President, Controller and Chief Accounting Officer

Board of directorS


chicago technology develoPMent center


Our new LEED®-platinum designed Technology Development Center, from its stunning lobby (pictured above) with dynamic digital mural to collaborative meeting areas, advances WMS’ commit-ment to sustainability and innovation in a workplace designed to inspire creativity, teamwork and productivity.

Fiscal Year Ended June 30,

(in millions, except per share amounts) 2012 2011 2010 2009 2008 2007

Statement of Income Data:

Revenues $ 689.7 $ 783.3 $ 765.1 $ 706.4 $ 650.1 $ 539.8

Total gross profit 429.0 470.7 489.4 448.9 386.2 305.0

Impairment and restructuring(1)(2) 9.7 22.2 — — — —

Operating income 87.4 110.4 167.9 136.6 104.4 74.2

Income before income taxes 99.1 123.6 170.5 140.4 105.6 71.7

Provision for income taxes 35.0 42.6 57.6 48.2 38.1 22.8

Net income(1)(2)(3)(4)(5)(6) $ 64.1 $ 81.0 $ 112.9 $ 92.2 $ 67.5 $ 48.9

Earnings Per Share:

Basic $ 1.15 $ 1.40 $ 2.02 $ 1.87 $ 1.34 $ 1.01

Diluted $ 1.15 $ 1.37 $ 1.88 $ 1.59 $ 1.15 $ 0.86

Weighted-Average Common Shares:

Basic common stock outstanding 55.5 57.7 56.0 49.2 50.2 48.4

Diluted common stock and common stock equivalents 55.8 59.0 60.4 59.1 60.6 59.6

Dividends Per Common Share $ — $ — $ — $ — $ — $ —

Purchases of Treasury Stock $ 50.4 $ 101.5 $ 45.0 $ 40.5 $ 35.0 $ —

Cash Flow Data:

Net cash provided by (used in):

Operating activities $ 156.8 $ 157.1 $ 130.3 $ 179.2 $ 186.2 $ 118.9

Investing activities (194.2) (157.0) (108.6) (113.8) (117.8) (158.8)

Financing activities 10.8 (77.0) 9.7 (29.8) (5.2) 35.6

Effect of exchange rates on cash and cash equivalents (1.8) 0.9 (0.4) (0.7) 0.4 2.4

Increase (decrease) in cash and cash equivalents $ (28.4) $ (76.0) $ 31.0 $ 34.9 $ 63.6 $ (1.9)

As of June 30,

2012 2011 2010 2009 2008 2007

Balance Sheet Data:

Cash and cash equivalents $ 62.3 $ 90.7 $ 166.7 $ 135.7 $ 100.8 $ 37.2

Working capital 281.5 345.1 414.2 334.3 296.7 255.5

Total accounts and notes receivable, net 405.1 366.2 326.2 252.5 206.2 180.4

Total assets 1,154.1 1,046.3 1,007.0 856.0 772.7 655.7

Long-term debt(7) 60.0 — — 115.0 115.0 115.0

Stockholders’ equity(7) 877.3 855.9 833.9 591.4 510.8 433.6

(1) Net income in fiscal 2012 includes $9.2 million of net after-tax charges, or $0.16 per diluted share, principally recorded in the September 2011 quarter, which includes $6.7 million net after-tax of impairment and restructuring charges, including $3.8 million net after-tax of separation-related costs and $2.9 million net after-tax of costs related to the decision to close two facilities; $2.5 million net after-tax, or $0.04 per diluted share, of non-cash charges to write-down receivables following government enforcement actions at certain casinos in Mexico; and $1.3 million net after-tax, or $0.02 per diluted share, of costs for legal settlements. Net income also includes a net after-tax cash benefit of $1.3 million from litigation settlement recorded in the December 2011 period.

(2) Net income in fiscal 2011 includes $16.6 million of net after-tax charges, or $0.28 per diluted share, which includes $14.3 million, or $0.24 per diluted share, of net after-tax impairment and restructuring charges comprised of $11.8 million, or $0.20 per diluted share, for net after-tax non-cash asset impairments (including $6.8 million net of taxes for impairment of technology licenses, $2.1 million net of taxes for impairment of the Orion™ brand name, $1.9 million net of taxes for an impairment charge to write-down the value of the Orion Gaming facility in the Netherlands to fair value upon closing the facility, $0.9 million net of taxes for impairment of receivables related to government action to close casinos in Venezuela and $0.1 million net of taxes of other impairment charges); and $2.5 million or $0.04 per diluted share for after-tax restructuring charges (primarily separation costs); along with $5.9 million of after-tax charges, or $0.10 per diluted share, for asset write-downs and other charges (including charges for inventory write-downs related to winding down the Orion and original Bluebird product lines); partially offset by $2.5 million or $0.04 per diluted share from after-tax cash proceeds of litigation settlement and $0.02 per diluted share benefit recorded in income taxes related to the period January 1, 2010 through June 30, 2010 from the retroactive reinstatement of the Federal research and development tax credit.

(3) Net income in fiscal 2010 includes a $3.6 million net tax benefit from a lower effective income tax rate resulting from discrete tax items, primarily the favorable completion of federal income tax audits through fiscal 2007.

(4) Net income in fiscal 2009 includes a $3.1 million after-tax gain from a cash settlement of trademark litigation and a $1.1 million income tax benefit related to the period January 1, 2008 through June 30, 2008 due to the retroactive reinstatement of the Federal research and development tax credit.

(5) Net income in fiscal 2008 includes a $2.3 million after-tax write-down to net realizable value of a technology license. (6) Net income in fiscal 2007 includes a $1.0 million after-tax charge for expenses associated with management separation costs during the period and a $0.7 million income tax benefit

related to the period January 1, 2006 through June 30, 2006, due to the retroactive reinstatement of the Federal research and development tax credit in December 2006.(7) On October 18, 2011, we entered into an amended and restated revolving credit agreement with a group of eight banks. This agreement provides for borrowings up to $400 million through

October 18, 2016, with the ability to expand the facility to $500 million from the existing lenders willing to increase their commitments or from additional lenders with the consent of the administrative agent. At June 30, 2012, $60.0 million was outstanding under the amended and restated revolving credit facility. In fiscal 2010, we issued 8.7 million of our common shares upon the early conversion to common stock of $115.0 million principal amount of our 2.75% Convertible Subordinated Notes (“Notes”). As a result of the conversion of all of our Notes, our stockholders equity was increased by $115.0 million.

WMS INDuSTRIES INC.

FinanCial data

6-year Consolidated


Favorable (unfavorable)

Fiscal Year Ended 2012 vs. 2011 2011 vs. 2010

2012 2011 2010 % %

Product Sales Revenues

New unit revenues $ 333.6 $ 403.2 $ 387.6 (17.3) 4.0

Other product sales revenues 94.7 86.0 73.3 10.1 17.3

Total product sales revenues $ 428.3 $ 489.2 $ 460.9 (12.4) 6.1

New units sold 20,903 24,216 24,944 (13.7) (2.9)

Average sales price per new unit $ 15,959 $ 16,651 $ 15,540 (4.2) 7.1

Gross profit on product sales revenues(1) $ 223.1 $ 235.3 $ 243.5 (5.2) (3.4)

Gross margin on product sales revenues(1) 52.1% 48.1% 52.8% 8.3 (8.9)

Gaming Operations Revenues

Participation revenues $ 234.2 $ 277.7 $ 287.6 (15.7) (3.4)

Other gaming operations revenues 27.2 16.4 16.6 65.9 (1.2)

Total gaming operations revenues $ 261.4 $ 294.1 $ 304.2 (11.1) (3.3)

Installed Participation Base at Year End with Lease

Payments based on:

Percentage of coin-in units 3,681 3,780 3,765 (2.6) 0.4

Percentage of net win units 2,859 3,072 3,334 (6.9) (7.9)

Daily lease rate units(2) 3,021 3,018 3,322 0.1 (9.2)

Total Installed Participation Base at Year End 9,561 9,870 10,421 (3.1) (5.3)

Average participation installed base units 9,335 10,046 10,298 (7.1) (2.4)

Average revenue per day per participation units $ 68.52 $ 75.76 $ 76.53 (9.6) (1.0)

Gross profit on gaming operations revenues(1) $ 205.9 $ 235.4 $ 245.9 (12.5) (4.3)

Gross margin on gaming operations revenues(1) 78.8% 80.0% 80.8% (1.5) (0.1)

Total revenues $ 689.7 $ 783.3 $ 765.1 (11.9) 2.4

Total gross profit(1) $ 429.0 $ 470.7 $ 489.4 (8.9) (3.8)

Total gross margin(1) 62.2% 60.1% 64.0% 3.5 (6.1)

Total operating income $ 87.4 $ 110.4 $ 167.9 (20.8) (34.2)

Total operating margin 12.7% 14.1% 21.9% (9.9) (35.6)

Net income $ 64.1 $ 81.0 $ 112.9 (20.9) (28.3)

Earnings Per Share:

Basic $ 1.15 $ 1.40 $ 2.02 (17.9) (30.7)

Diluted $ 1.15 $ 1.37 $ 1.88 (16.1) (27.1)

bp basis points(1) As used herein, gross profit and gross margin exclude depreciation and amortization and distribution expense. (2) Includes only participation game theme units with fixed daily lease rates. Does not include units with product sales game themes placed under fixed-term, daily fee operating leases.

Below are revenues, Gross Margins and Key Performance Indicators.

This information should be read in conjunction with our

Consolidated Statements of Income

(in millions, except unit, per unit and per day data):

WMS INDuSTRIES INC.

FinanCial and operating data

Selected


(in millions of U.S. dollars and millions of shares, except per share amounts) 2012 2011 2010

Revenues:

Product sales $ 428.3 $ 489.2 $ 460.9

Gaming operations 261.4 294.1 304.2

Total revenues 689.7 783.3 765.1

Costs and Expenses:

Cost of product sales(a) 205.2 253.9 217.4

Cost of gaming operations(a) 55.5 58.7 58.3

Research and development 94.5 117.0 105.9

Selling and administrative 145.2 150.0 148.4

Depreciation and amortization(a) 92.2 71.1 67.2

Impairment and restructuring charges 9.7 22.2 —

Total costs and expenses 602.3 672.9 597.2

Operating Income 87.4 110.4 167.9

Interest expense (1.6) (1.2) (3.2)

Interest income and other income and expense, net 13.3 14.4 5.8

Income before income taxes 99.1 123.6 170.5

Provision for income taxes 35.0 42.6 57.6

Net Income $ 64.1 $ 81.0 $ 112.9

Earnings per share:

Basic $ 1.15 $ 1.40 $ 2.02

Diluted $ 1.15 $ 1.37 $ 1.88

Weighted-average common shares:

Basic common stock outstanding 55.5 57.7 56.0

Diluted common stock and common stock equivalents 55.8 59.0 60.4

(a) Cost of product sales and cost of gaming operations exclude the following amounts of depreciation and amortization, which are included in the depreciation and amortization line item:Cost of product sales $ 6.4 $ 4.8 $ 4.4Cost of gaming operations $ 57.6 $ 40.1 $ 44.0

WMS INDuSTRIES INC. FOR ThE YEARS ENDED JuNE 30, 2012, 2011 AND 2010

statements oF inCome

Consolidated


(in millions of U.S. dollars and millions of shares) 2012 2011

Assets

Current Assets:

Cash and cash equivalents $ 62.3 $ 90.7

Restricted cash and cash equivalents 13.8 14.3

Total cash, cash equivalents and restricted cash 76.1 105.0

Accounts and notes receivable, net 282.8 284.6

Inventories 53.3 67.1

Other current assets 40.1 40.8

Total current assets 452.3 497.5

Non-Current Assets:

Long-term notes receivable, net 122.3 81.6

Gaming operations equipment, net 115.7 86.8

Property, plant and equipment, net 226.7 171.5

Intangible assets, net 178.9 153.9

Deferred income tax assets 39.3 43.1

Other assets, net 18.9 11.9

Total non-current assets 701.8 548.8

Total Assets $ 1,154.1 $ 1,046.3

Liabilities and Stockholders’ Equity

Current Liabilities:

Accounts payable $ 84.8 $ 66.2

Accrued compensation and related benefits 9.5 12.3

Other accrued liabilities 76.5 73.9

Total current liabilities 170.8 152.4

Non-Current Liabilities:

Long-term debt 60.0 —

Deferred income tax liabilities 22.7 23.9

Other non-current liabilities 23.3 14.1

Total non-current liabilities 106.0 38.0

Commitments, contingencies and indemnifications — —

Stockholders’ Equity:

Preferred stock (5.0 shares authorized, none issued) — —

Common stock (200.0 shares authorized and 59.7 shares issued) 29.8 29.8

Additional paid-in capital 443.5 437.9

Treasury stock, at cost (4.9 and 2.9 shares, respectively) (144.1) (104.9)

Retained earnings 554.9 490.0

Accumulated other comprehensive income (loss) (6.8) 3.1

Total stockholders’ equity 877.3 855.9

Total Liabilities and Stockholders’ Equity $ 1,154.1 $ 1,046.3

WMS INDuSTRIES INC.JuNE 30, 2012 AND 2011

BalanCe sheets

Consolidated


Common shares issued

Common shares held in treasury Common stock

Additional paid-in capital

Treasury stock, at cost Retained earnings

Accumulated other comprehensive

income (loss)Total

stockholders’ equity

(in millions of U.S. dollars and millions of shares)

51.0 (1.8) Balance, June 30, 2009 $25.5 $311.9 $ (45.4) $296.1 $ 3.3 $ 591.4

Comprehensive income:

— — Net income — — — 112.9 — 112.9

— — Foreign currency translation adjustment — — — — (9.4) (9.4)

— — Comprehensive income — — — — — 103.5

— 2.0 Vesting of restricted stock and exercise of stock options and related tax benefits — (8.0) 54.5 — — 46.5

8.7 — Conversion of Convertible Subordinated Notes to common stock 4.3 110.7 — — — 115.0

— (1.1) Purchase of treasury shares — — (45.0) — — (45.0)

— — Share-based payment expense — 20.3 — — — 20.3

— — Other — 0.6 1.6 — — 2.2

59.7 (0.9) Balance, June 30, 2010 29.8 435.5 (34.3) 409.0 (6.1) 833.9


— — Net income — — — 81.0 — 81.0

— — Foreign currency translation adjustment — — — — 9.2 9.2





59.7 (2.9) Balance, June 30, 2011 29.8 437.9 (104.9) 490.0 3.1 855.9


— — Net income — — — 64.1 — 64.1

— — Foreign currency translation adjustment — — — — (9.9) (9.9)





— — Impact of ASU 2010-16 accounting change on WAP base jackpot liabilities — — — 0.8 — 0.8

59.7 (4.9) Balance, June 30, 2012 $29.8 $443.5 $(144.1) $554.9 $ (6.8) $ 877.3

WMS INdUSTRIeS INC.FOR The YeARS eNded JUNe 30, 2012, 2011 ANd 2010

STATEMENTS of STockholdErS’ EquiTy ANd coMprEhENSivE iNcoME

Consolidated



(in millions of U.S. dollars) 2012 2011 2010

Cash Flows from Operating Activities

Net income $ 64.1 $ 81.0 $ 112.9

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 77.8 71.1 67.2

Amortization of intangible and other non-current assets 29.0 21.6 22.2

Share-based compensation 15.8 18.7 20.3

Non-cash restructuring and impairment charges 0.6 18.4 —

Other non-cash items 11.7 11.4 2.4

Deferred income tax benefit (1.0) (13.1) (6.6)

Tax benefit from exercise of stock options (0.2) (10.1) (20.1)

Change in operating assets and liabilities, net:

Restricted cash 0.5 3.6 1.1

Total accounts and notes receivable (44.8) (46.8) (76.7)

Inventories 15.7 (9.5) (14.4)

Current liabilities 10.0 21.4 44.9

Other current and long-term assets and long-term liabilities (22.4) (10.6) (22.9)

Net cash provided by operating activities 156.8 157.1 130.3

Cash Flows from Investing Activities

Additions to gaming operations equipment (83.0) (65.9) (43.5)

Additions to property, plant and equipment (81.4) (66.2) (56.8)

Acquisitions of business, net of cash acquired (16.4) — —

Payments to acquire or license intangible and other non-current assets (13.4) (24.9) (8.3)

Net cash used in investing activities (194.2) (157.0) (108.6)

Cash Flows from Financing Activities

Proceeds from borrowings under revolving credit facility 60.0 — —

Purchase of treasury stock (50.4) (101.5) (45.0)

Debt issuance costs (2.4) — (1.7)

Cash received from exercise of stock options and employee stock purchase plan 3.4 14.4 37.2

Tax benefits from exercise of stock options 0.2 10.1 20.1

Other — — (0.9)

Net cash provided by (used in) financing activities 10.8 (77.0) 9.7

Effect of exchange rates on cash and cash equivalents (1.8) 0.9 (0.4)

Increase (Decrease) In Cash and Cash Equivalents (28.4) (76.0) 31.0

Cash and Cash Equivalents, beginning of year 90.7 166.7 135.7

Cash and Cash Equivalents, end of year $ 62.3 $ 90.7 $ 166.7

WMS INDuSTRIES INC. FOR ThE YEARS ENDED JuNE 30, 2012, 2011 AND 2010

statements oF Cash Flows

Consolidated


WMS induStrieS inc.

corporate information

2012

Executive Office800 S. northpoint Boulevard Waukegan, iL 60085 (847) 785-3000

Websitewww.wms.com

Independent Registered Public Accounting Firmernst & Young LLP 155 north Wacker drive chicago, iL 60606

Counsel to the CompanyBlank rome LLP the chrysler Building 405 Lexington Avenue new York, nY 10174

Transfer Agent and Registrar American Stock transfer & trust company, LLc59 Maiden LanePlaza Level new York, nY 10038(800) 937-5449 or (718) 921-8124www.amstock.come-mail: [email protected]

Investor RelationsWilliam Pfund Vice President, investor relations (847) 785-3167

PublicationsOur Annual report on Form 10-K can be viewed on our website at www.wms.com under the investor relations header and is available without charge upon written request to us at WMS industries inc., Attn: investor relations, 800 S. northpoint Boulevard, Waukegan, iL 60085.

there are no accounting differences between the consolidated Financial Statements presented in this Summary Annual report and the consolidated Financial Statements presented in our Annual report on Form 10-K. the Form 10-K Annual report provides a full disclosure of information as required by Securities and exchange commission (Sec) regulations.

Our Board of directors has adopted corporate charters for our Audit and ethics committee, our compensation committee and our nominating and corporate Governance committee. it also has adopted corporate Governance Guidelines and a code of conduct. these documents describe the responsibil-ities of our directors and executive officers and other key corporate governance matters.

these documents can be viewed on the corporate Governance page of our website at www.wms.com or are available without charge upon written request to us at: WMS industries inc., Attn: investor relations, 800 S. northpoint Boulevard, Waukegan, iL 60085.

Forward-Looking Statementsthis report contains statements that do not relate to historical or current facts, but are “forward-looking” statements within the meaning of the Private Securities Litigation reform Act of 1995. these statements relate to analyses and other infor-mation based on forecasts of future results and estimates of amounts not yet determinable. these statements may also relate to future events or trends, our future prospects and proposed new product, services, developments or business strategies, among other things. Actual results could differ materially from those expressed or implied in our forward-looking statements, which are subject to inherent risks and uncertainties. A discussion of these risks and uncertainties is set forth under item 1. “Business” and item 1-A. “risk Factors” in our 10-K Annual report. Although we believe the expectations reflected in our forward-looking statements are reasonable, any or all of our forward-looking statements may prove to be incorrect.

Legal NoticesProduct names mentioned or shown in this report are trademarks or registered trademarks of our subsidiary, WMS Gaming inc., except for the following marks:

GONE WITH THE WIND, its characters and elements are trademarks of turner entertainment co. & the Stephens Mitchell trusts. © turner entertainment co. (s12)

CLUE and MONOPOLY are trademarks of Hasbro. used with permission. © 2012 Hasbro. All rights reserved.

LEED and the GREEN BUILDING RATING SYSTEM are trade-marks of the u.S. Green Building council.

THE LORD OF THE RINGS © 2012 new Line Productions, inc. All rights reserved. the Lord of the rings: the Fellowship of the ring, the Lord of the rings: the two towers, the Lord of the rings: the return of the King and the names of the characters, items, events and places therein are trademarks of the Saul Zaentz company d/b/a Middle-earth enterprises under license to new Line Productions, inc.

© 2012 WMS industries inc.

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800 South Northpoint Boulevard

Waukegan, Illinois 60085

847.785.3000

www.wms.com

http://www.wms.com

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